Regulations in New Zealand

Who is an Employee and who is not?
It is important to be clear about whether your employment relationship is an "employment relationship" or some other form of relationship. This is because the law for employer-employee relationships is different from the law for other types of relationships.

Here we cover the main rights and obligations of employers and employees who are in an employment relationship. We do NOT cover rights and obligations relating to other types of relationships, such as those between principal and contractor or contractor and sub-contractor.

An employee is: anyone who has agreed to be employed, under a contract of service, to work for some form of payment. This can include wages, salary, commission and piece rates.

An employee is not:

  • a volunteer, who does not expect to be rewarded and receives only a reimbursement for their expenses.
  • a self-employed or an independent contractor.
  • a sharemilker.
  • a realtor who has a contract that says they are an independent contractor.

Indications of being an “Employee”
If all or most of these features are present in a work relationship, it is likely to be an employment relationship between employer and employee:

  • the intention of the employer and employee is to form an employment relationship, and this is shown in any written agreement or correspondence and/or by the behaviour of the parties to it.
  • the employer or their agent controls the hours worked.
  • the employer or their agent has the power to hire and fire.
  • the employer makes the profit or loss from the enterprise.
  • the employer deducts ACC premiums and FED INCOME TAX tax on behalf of the employee.
  • the employer supplies materials for the work.
  • the employer owns or leases the equipment needed.
  • the employee is bound to one employer at a time and is expected not to compete or offer his or her skills to competitors of the employer.

Indications of being a “Self-employed Contractor”
If all or most of the following features are present in a work relationship, it is likely to be a contract for services involving a self-employed contractor:

  • the intention of the parties to the contract is not to form an employment relationship, and the actual nature of the relationship reflects this.
  • the contractor controls how and when the job is done.
  • payment is made in a lump sum at the end of a job, or in instalments as progress is made on the job.
  • the contractor can choose who does the job and can hire other people without approval from the other party.
  • the contractor pays any tax, ACC and insurance directly.
  • the contractor can make a profit or suffer a loss directly.
  • the contractor supplies equipment and materials.
  • the contractor is free to accept similar work from a number of sources at the same time.

Unsure if you are an Employee or Contractor?
Sometimes it is not clear whether someone is an employee or a self-employed contractor.
This can be the case where:

  • Someone is engaged as a self-employed contractor, but they think they are really an employee; or, more typically.
  • During the course of either an investigation by a Labour Inspector, in the course of mediation or before the Employment Relations Authority, where there is an action, say to recover arrears of wages or holiday pay, the actual nature of the relationship sometimes comes into question.

Here, mediation assistance can first help settle the real nature of the relationship or the Authority can determine the matter. Also, the Employment Court can be asked to determine employment status either of an individual or a group of people in the same position.